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Buyout giant The Blackstone Group opened up an office in Dubai over the summer, its first foothold in the Middle East, as the world's sovereign wealth hot-spot lures global firms with potentially lucrative advisory businesses and investing partnerships in the region.

Blackstone, one of the world's largest private equity firms, hopes to use its Middle East base to bring some if its portfolio companies to the region, Rafic Said, managing director and head of the Middle East, said in a recent interview at the World Economic Forum's meeting in Morocco.

Blackstone also could team up with Gulf sovereign wealth funds--traditionally major investors in Blackstone funds--on their own direct investments, Said added.

"We'd like to be more collaborative with our limited partner clients--that's the direction that we'd like to go in," he said.

The firm is in discussions to set up a regional software operation for its portfolio company Travelport, the leading online travel and global distribution systems provider, he said. Blackstone will also look for partners on the ground in the Middle East's large family groups, banks, or SWFs for other companies "looking for a regional hub or a launch-pad in Asia," Said said. "It would be someone to team up with--it may entail an investment or it may not."

Dubai's position as a travel and logistics hub and the wider Middle East's young, booming population make the proposition for setting up local operations for most companies a "no brainer," Said said.

The oil-rich Gulf region – home to large sovereign investors in Saudi Arabia, Qatar, and the UAE – is a major source of capital for Blackstone, and has been traditionally a place for fundraising, rather than investing, for the largest global private equity firms.

Blackstone's latest global fund has raised $13.5bn so far, "and that might be getting higher," Said said, with a close expected by the end of the year. The firm aims for at least 10% of a fund's capital to come from the Middle East.

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Regardless, buyout deals in the region are scarce. Kohlberg Kravis Roberts moved into Dubai in late 2008 with similar hopes of pushing into the Middle East.

"We're open to invest in the region and we're very interested, but the market is a little bit tight on the sort of deals that we're looking to do," Said said. Not only is the region already capital-rich, but "selling companies are still, culturally, in development mode."

Where the firm can benefit from proximity to the pools of capital is in advising sovereign wealth funds on their own investments, or looking for co-investments.

"It's no secret that some of the big sovereign wealth funds are looking to make more direct investments internationally, and have done that" Said said. "Where we can help them, we would like to do that," he said, with Blackstone coming in as adviser on potential deals in the US or elsewhere abroad, or deals it has looked at itself.

"The days are gone when you sit in New York and send a quarterly NAV on how a fund's doing to the Middle East. That doesn't work anymore."